THE CORPORATE PRACTICE OF MEDICINE DOCTRINE

The Corporate Practice of Medicine Doctrine (the “CPMD”) prohibits non-physicians from the practice of medicine. The CPMD is manifested in three ways: (1) a non-licensed person or corporation cannot employ a physician to practice medicine; (2) entities that provide health care services cannot be owned or controlled by non-licensed persons or general corporations; and (3) a licensed professional may not share a professional fee with a non-licensed person or entity, because such an act is considered to be assisting an unlicensed person to practice medicine. Nicole Huberfeld, Be Not Afraid of Change: Time to Eliminate the Corporate Practice of Medicine Doctrine, 14 Health Matrix 243, 244 (2004). Its origin was based on public policy arguments for providing safe and effective medical services to patients.

During the nineteenth century, medical practice was not necessarily inferior, but it was “insecure and ambiguous.” Paul Starr, The Social Transformation of American Medicine: The rise of a sovereign profession and the making of a vast industry 81 (Basic Books, Inc., Publishers 1982); see id. at 85 (“The status of the medical profession, though insecure, was probably higher than its objective economic situation might suggest. . . . On the one hand, physicians felt a need to maintain an image of a cultivated, respectable, learned profession; on the other, the reality was that many doctors had little education and often, when starting out in practice, could barely support themselves.”). Physicians faced immense competition not only with themselves, but also with “’irregulars’—quacks and healing sectarians” who did not obtain a traditional medical education. Sara Mars, The Corporate Practice of Medicine: A Call For Action, 7 Health Matrix 241, 247 (1997).

The corporate involvement in medicine emerged in two forms: (1) “contract practice,” where corporations employed physicians to provide medical services to their employees, and (2) “corporate practice,” where physicians’ services were marketed to the public by corporations which either employed physicians or contracted separately for their services. Adam M. Freiman, The Abandonment of the Antiquated Corporate Practice of Medicine Doctrine: Injecting a Dose of Efficiency into the Modern Health Care Environment, 47 Emory L.J. 697, 701 (1998). The corporate involvement of medicine alarmed the leaders of the medical profession who maintained that such involvement would result in a lower quality of care to patients. Id. at 702. These “commercial intermediaries,” focused mainly on profit share and contracted with doctors to give treatment at low rates, which usually meant lower-quality medical services. Starr, supra, at 199. The American Medical Association (“AMA”) spoke out by adopting a statement urging physicians to resist the further expansion of contract and corporate practice. Freiman, supra, at 702. Over time, however, a conflicting efficiency rationale due to the rise of health care costs has been relied upon to chip away at the doctrine. The result is that the application of the CPMD varies considerably across the states with no clear indication of the doctrine’s future.

Various measures of health benefits like health promotion, rescue and relieving patient suffering are all essential features of health care. Einer R. Elhauge, Can Health Law Become A Coherent Field of Law?, 41 Wake Forest L. Rev. 365, 381 (2006). Therefore, the inception of the CPMD is based on valid grounds. However, the health care industry has changed significantly since the nineteenth century, particularly in regards to the need to contain the costs of health care services. These other essential features, costs and tradeoffs, raised by health care explain why the current scope of the CPMD is assorted. There must be a balance of both competing interests. States should try and balance both the economic and patient-centered goals when applying the CPMD and apply the doctrine in a consistent manner.

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